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Child support collection in a gig economy

On Behalf of | Nov 21, 2018 | Firm News |

The gig economy has evolved over the last few years due to job market instability and the need for affected Americans to fill in the financial gaps. Gig economy jobs are sometimes called side jobs when the gig worker also has traditional employment.

Technology gives workers increased mobility and the means to find short-term contract work they can perform from any location. They can select temporary jobs from around the world through the internet.

As traditional businesses shrink their full-time workforce by pushing some employees out, the disenfranchised workers often jump into gig lifeboats to get by. Although most gig workers report they prefer a traditional job, many are unable to find a stable, long-term position. Those who are lucky enough to secure a permanent place often find they still need to work a side job to survive.

How big is the gig economy?

The U.S. Department of Labor’s Bureau of Labor Statistics performed a nationwide study of the gig economy. The latest report, released in June 2018, identifies 19.6 million gig workers divided into two work-type groups: about 5.9 million contingent workers in jobs not expected to last, and an aggregate 4.7 million alternative workers composed of independent contract/freelance jobs, on-call work, temporary agency employment and for-hire work from contract firms.

Why does gig work affect child support?

Capture of late or missing child support payments from a parent through tax or employment wage garnishments is not possible with nontraditional jobs. Gig workers do not report income through the W-2 system. If a parent elects not to report gig-acquired income, child support enforcement loses their money trail.

Most parents want to pay child support, but the unstable nature and potentially low pay of most gig workers leave them without sufficient resources to meet their obligations. Forbes cites a report which states that gig workers’ financial lives are precarious because they do not enjoy the beneficial rights or security of traditional permanent employment. The report suggests that policymakers need to create a similar model of employment security for nontraditional workers.

Can child support agencies broaden the reach for gig resources?

The Office of Child Support Enforcement, a branch of the federal U.S. Department of Health & Human Services, is currently examining child support collection methods that involve gig worker parents. They are attempting to create revised models for new hire reports and income withholding. At the state level, governments are pushing legislation to expand employee classifications.

Parents concerned about child support can discuss how changes in 2019 may affect them. While the impact of gig work on child support is an evolving issue, parents who pay or receive child support may wish to plan for emerging developments.